July 11 (Bloomberg) -- Computer systems used by the U.S.
Department of Labor to produce market-sensitive economic data
are more likely to be a source of possible leaks than a facility
used by journalists to report on the figures, according to a
study commissioned by the department.

Sandia National Laboratories was hired to examine possible
sources of leaks at so-called lockups, where journalists are
given copies of reports on data such as the unemployment rate in
advance of their release to the public.

“The IT environments where the data are produced are more
likely avenues for data loss than is the Press Lockup
facility,” according to a footnote in the August 2011 report
posted on the Department of Labor website.

Sandia said it was asked to look into security at the
lockups after the Labor Department was approached by
authorities, including the U.S. Securities and Exchange
Commission and the FBI, “concerned that key economic data were
potentially subject to unauthorized, premature release.”
Sandia’s “scope of allowed activities” was limited to the
lockups and didn’t include “other areas associated with the
preparation of the target data.”

After the Sandia study, the Labor Department in April
ordered media organizations to remove computer software,
hardware and communications lines they had installed at the
department. Instead, reporters were told they would have to use
government equipment, software and Internet connections.

Media Protests

Bloomberg and other news organizations protested the
procedures, saying they hindered their ability to transmit
market-moving news to readers quickly and accurately using the
best available technology.

Reporters in lockups are given data, typically 30 minutes
before their broader release. This gives journalists time to
prepare stories and headlines that are published after a
government employee throws a switch opening communications lines
to the news organizations’ computer systems.

Sandia Corp. is a unit of Lockheed Martin Corp., the
world’s biggest defense contractor. Sandia operates national
laboratories for the Energy Department in Albuquerque, New
Mexico, and Livermore, California.

Sandia’s study for the Labor Department “provided
technical analysis as one step in a process to reduce potential
economic-data compromises,” Stephanie Holinka, a spokeswoman for
the company, said yesterday in an e-mail. It was one of many
such studies Sandia has done for the federal government and
private industry, she said.

FBI, SEC

SEC spokesman John Nester declined to comment. Paul
Bresson, spokesman for the FBI, didn’t immediately respond to a
request for comment.

The Labor Department each month produces a report on the
jobless rate and the change in payrolls for the previous month.
It also compiles reports on consumer and producer prices and
weekly claims for unemployment benefits.

Some members of Congress also objected to the new Labor
Department procedures.

“Given the market-moving impact of these numbers and the
largely automated processes of today’s market institutions, even
a minor flaw in the timing or accuracy of this data could result
in a destructive impact on global markets,” Senator Roy Blunt,
a Missouri Republican, wrote in a letter to Secretary of Labor
Hilda Solis.

Representative Darrell Issa, a California Republican who
conducted a hearing on the issue on June 6.

Mobile Phones

After the complaints, the Labor Department agreed to allow
news organizations to continue using their own equipment and
data lines. Reporters will be required to leave mobile phones
and other electronic devices in lockers outside of the lockup
room, along with personal effects such as umbrellas and purses.

Stephen Barr, a spokesman for the Labor Department,
declined to comment on the Sandia report and referred to a
letter addressed to Issa.

“The Sandia team noted that the lockup is but one part of
a larger data assembly and distribution process,” according to
the June 26 letter from Brian Kennedy, assistant secretary for
congressional and intergovernmental affairs at the Labor
Department.

“While Sandia speculates on other areas of potential
vulnerability, including within the Bureau of Labor Statistics
(BLS), Sandia’s team did not review BLS’s data security
procedures and safeguards because those issues were outside the
scope” of an agreement between the Labor Department and the
U.S. Department of Energy.

The letter also said BLS has “robust security measures in
place for many years,” and that the department “undergoes
regular third-party audits.”